Could the End of Yahoo Be Near?

Since the phenomenal rise of Google, two giants of the Old Web have fallen on hard times, unable to compete with the Internet Colossus. Both Yahoo and AOL have been struggling to remain relevant in a world dominated by Google, Facebook, and Twitter, but it seems that they can’t do it alone. Reports are circulating that AOL and a consortium of investors including Silver Lake and Blackstone are now preparing to make a takeover bid for Yahoo. The consortium is necessary considering that AOL’s market value is only about 10 percent of Yahoo’s.

This won’t be the first time that an internet giant has attempted to take over the company. Much of Jerry Wang’s tenure as Yahoo CEO was spent negotiating with and fending off a takeover by Microsoft, and the two companies have since entered a partnership. But that hasn’t been enough to save Yahoo, whose quarterly reports are due next Tuesday. News of a possible takeover is, with pre-market trading showing shares up 12 percent this morning.

Some observers have speculated that the takeover bid would get the support of the Chinese Internet company Alibaba. Yahoo owns 39 percent of the company, but relations between its abrasive CEO Carole Bartz and Alibaba CEO Jack Ma are reported to be shaky. Ma could facilitate the deal by agreeing to buy back Alibaba’s stock once the takeover is completed.

There are also several problems to overcome For instance, AOL has its own search engine which is powered in part by Google. Is the company prepared to ruin its relationship with Google by taking over Yahoo? And how would Microsoft, which has hammered out a deal with Yahoo, feel about collaborating with Google?

Even if Yahoo, AOL, and Microsoft were to pool their resources, they would still control only 30 percent of the U.S. search engine market. While this is a sizable chunk, it pales in comparison to Google’s 65.4 percent. On the other hand, the reports also claim that AOL’s goal would be to sell off most of Yahoo’s current assets and focus on online advertising.